WASHINGTON (PAI) — Chanting and waving signs saying that it’s time to “take back our economy” for workers, unionists in Washington and dozens of other cities nationwide spent March 19 protesting big bonuses to lousy executives.
Their ire was specifically focused on the $165 million in bonuses distributed to the sharpies at the insurance giant American International Group, which has received $170 billion in federal bailout funds and which is now 80% government-owned.
In Washington, almost 100 people — members of the Service Employees, United Food and Commercial Workers, the Communications Workers and other unions — picketed in front of the building on the capital’s infamous K Street, where AIG lobbyists and other special pleaders have their offices.
Chants of “Hey! Hey! What’s the fuss? Make the economy work for us!” punctuated demands that the bonuses be returned — and that Congress give more power to workers versus executives by passing the Employee Free Choice Act.
“We don’t need just restitution, we need prosecution,” said SEIU President Andrew Stern, leader of the D.C. protest.
The bonuses were negotiated in the corporate contracts before the government takeover of the giant insurer, which was deemed “too big to fail,” because it would drag down the rest of the world economy if it did, since it was intertwined with other firms and big banks around the globe.
And most of the money went to AIG execs at the financial unit that speculated in sub-prime mortgages and the flimsy securities based on them. When the sub-prime holders defaulted and the securities tanked, the U.S. got dragged into the current crash.
The unionists’ ire matched that of the country, the Obama administration, and Congress. Democratic President Barack Obama ordered his Treasury Department to probe ways to “claw back” the money.
“As workers are losing their jobs, homes and benefits it is unconscionable that AIG executives — who tanked their own company and the economy — are taking millions of dollars in bonuses from those same workers’ tax dollars,” AFL-CIO President John J. Sweeney said before the nationwide protests. “We fully support the efforts to take these bonuses back and return the money to America’s taxpayers. “Any argument that these bonuses ‘must be’ paid because of contracts rings hollow with workers who had to re-negotiate their contracts, salaries, and benefits during these tough economic times,” he added.
The day of the protests, the House passed legislation imposing a 90% tax rate on excessive bonuses to executives at “any firm receiving more than $5 billion” in U.S. aid. Rep. Charles Rangel, D-N.Y., chair of the tax-writing House Ways and Means Committee, cracked that states and cities “would probably take the other 10%.”
And Senate Finance Committee Chairman Max Baucus, D-Mont., and top Republican Charles Grassley, R-Iowa, introduced legislation taxing not only the executives but the companies — and not just AIG — that got the federal aid and paid out the big money, too. The taxes would be 35% for both companies and individuals of all “retention bonuses,” such as those paid to the AIG executives, and 35% of all other bonuses, too.
The Senate measure would also cap how much money executives can defer, to escape taxes, at $1 million. It would also put in place mechanisms to prevent firms from converting honchos’ bonuses to salaries, thus escaping the taxes on bonuses.
The Washington Post reported March 19 that dozens of companies, not just AIG, paid their executives millions in bonuses even as the firms went financially down the tubes, taking their workers with them.
At one politically connected investment house in the D.C. suburbs, two executives took home $675,000 in bonuses even though the company lost $195 million last year. Fannie Mae, also now government-owned — and which also took a bath in the sub-prime market — is distributing $3.5 million in bonuses, on top of their salaries, to four top executives. Fannie Mae got $15 billion in taxpayer money last year and says it will need even more.